A community business bank in the heart of the Northeast Valley may seem like a hard sell, but the idea was a natural to Tamara Gurney, president and CEO of Mission Valley Bank, when she began organizing the financial institution about six years ago. A former executive of American Pacific Bank, Gurney saw first hand how the community reacted when that bank was acquired by City National Bank, leaving a void for a local institution. Other banks may have ignored the area, but Gurney knew the kind of potential that existed for a community bank that understood the needs of the mostly industrial small businesses that populate the area. Five years later, Mission Valley Bank has grown to two branches and assets of $185 million, up 40 percent over 2005. This year, with the addition of a specialized lending unit led by Vladimir Victorio, the bank has boosted its loan portfolio by 38 percent to more than $40 million. Gurney spoke to the Business Journal about the startup, the changing climate for community banks and what it’s like to be one of just a few women who head banking institutions. Question: Why did you decide to start a de novo bank in Sun Valley? Answer: We are all from American Pacific Bank. That bank opened in Sun Valley in 1971 and was acquired by City National Bank in 1999, and even though its headquarters moved to Sherman Oaks, the heart of that bank was in Sun Valley. People see this area as high industrial, low income and high crime. We knew this was a unique area that was underserved. We had enjoyed great success and knew the community very well. When American Pacific was acquired, this community lost that bank. It seemed logical that people here would embrace a community bank. Q: How difficult was it to raise funds for a community bank in the Northeast Valley? A: Conceptually it was an easy sell. It was very difficult because of the time. We filed application in summer, 2000, and as we went through the process, there was the dotcom burst, there was a presidential election and the administration changed to a Republican administration. So people who said I’ll write you a check in 2000, the money they had was in the stock market. So folks who first said they were in for $150,000 or $200,000 or $300,000 now were in for $50,000. Q: How did the bank gain traction so quickly? A: We originally planned to raise between $6 million and $7.5 million, and my hope was that we would end up at the high end of that. But as soon as we hit $6 million we said we have to open because it was costing us money. So we opened in July, 2001. We hit it hard. We ran it like we owned it ourselves. We didn’t have janitors. We did the cleaning up. We did everything ourselves. I think that’s how we broke even so quickly. We were in the black in nine months. And we had recovered our startup losses inside of 30 months. Q: You expanded very quickly into Valencia. Was that planned from the start? A: It was not in our original plan to have a second branch. When Valencia Bank & Trust was acquired we saw an opportunity. It was very similar to what happened to us at American Pacific. We hired Mark DeMik (from Valencia Bank & Trust) in September, 2003, and he was basically a bank in a car. He was like a business development person funneling business to Sun Valley. It took us about 18 months to get a location, so we didn’t open until early 2005. Santa Clarita is a really tight community and they don’t embrace outsiders. We knew we wouldn’t be successful until we had a branch there. Q: Do you plan to open additional branches in the foreseeable future? A: I’m still looking for opportunities like the one that developed in Santa Clarita, but I’m not out to put a footprint all around the San Fernando Valley and the Santa Clarita Valley. Technology is changing the landscape significantly and brick and mortar is very expensive. So we have to choose locations carefully. There is development along Castaic and in other areas in Santa Clarita, so I think there are opportunities for other branches in Santa Clarita when the right people present themselves. In the San Fernando Valley, I think it’s well banked. If there were any acquisitions in the San Fernando Valley that displaced a strong person I would consider building a franchise around that location. Q: How has the bank’s loan business grown since you created the specialized lending department? A: When we first opened we were trying to run so lean and mean and attend to our core customers that we didn’t have time to knock on doors and find those small business loans. Once we brought Vlad on board he went out and started finding product. By October, he produced $10 million in loans. So we’re really excited about the possibilities. Q: Does your location in the Northeast Valley insulate you from the competition that has developed now that several community banks have opened in the greater Valley area? A: I think the Northeast Valley definitely feels the isolation in terms of dollars allocated. For me it’s worked somewhat to my favor because the focus of other financial providers has not been in this area. But in a global perspective, it hurts. The services are not extended out here. I think in the last couple of years they’ve done a better job. Maybe because of the effort to pull away we’ve started to see more focus on the area. Q: What implications does the loss of enterprise zone status in the Northeast Valley have for your business? A: I think it’s too new right now. Certainly the businesses that directly received benefit are aware, but it’s mostly folks like us that are lending that are losing the tax break. Q: There are not many women heading banks and certainly not many women who have spearheaded the opening of a de novo bank. What has your experience been as a woman in the industry? A: I think amongst my constituents I had some strong support. The fact that I was a woman was a non-issue. The real challenge was opening a bank in this area. It is heavy industrial with rock crushing businesses and auto dismantlers and that is a good old boy world. As a woman walking in and introducing myself I think it was a bigger challenge. If I were opening a bank geared to women-owned business, there would have been an expectation that I was a woman. But because of the nature of the businesses, when I walk in and Vlad says this is our president, I get this mouth dropping look. They get over it very quickly. Q: What do you see occurring in the banking industry in the next year or so? A: Bigger banks are calling on my customers every day. My customers will show me a term sheet from another bank, big banks, not other community banks, and they’re cutting fees and offering very aggressive terms. It makes it very challenging. Community banks are going to be challenged with how to generate fee income. We are funding cd’s at a higher rate, so we’re paying more for the deposits we take in. If I have to pay 5 percent to get the money, and I’m lending it at 7 percent, my margins are cut, and if I’m not making money on that, I have to find some other way. You have to find other ways to generate fee income. Q: Why is the challenge of finding ways to generate fee income different for community banks? A: A Bank of America will have a wealth management division or a trust division, and they can operate it with economies of scale. They can automate a lot of things. Our cost structure as a community bank is different. SNAPSHOT: Tamara Gurney Title: President and CEO Mission Valley Bank Born: Burbank, 1952 Education: Bachelor’s degree in business administration from University of Phoenix, 1993. Graduate of the University of Wisconsin community banking program. Most Admired Person: Abraham Lincoln Personal: Single, two children and three grandchildren. Career Turning Point: “Once I had gotten to the officer level, I realized it was a lot of fun to see how a person could grow. Management sometimes gets in the way of employees’ progress. My job is to give them the tools and stay out of the way.”
